Sydney: Property boom has reached its peak, market indicator shows

Sydney’s real estate boom may be ending soon, says one of Australia’s largest property advisory groups.

Valuers Herron Todd White have warned that Sydney’s property boom is into its dying stages, with a national property clock showing prices have peaked and may soon fall.

The property clock is a simple measure to show where a market is in its price cycle: six o’clock signals the start of price growth, 12 o’clock the end and a time after 12 is a market where prices are falling.

The property group has put the Sydney market at 12 o’clock following a long run of price increases that have seen the median house price climb roughly $200,000 in three years to reach $780,000.

THE clock has struck 12:00 and the party is over.

Before that, the market had largely been in hibernation in the wake of a massive boom in values over the first half of the 2000s.

Property pundits have long cautioned that recent growth would not continue forever and that the current boom would be followed by a period of lacklustre growth, such as that directly after Sydney’s last boom.

Sydney being mapped at 12 o’clock indicates this period of sluggish activity may arrive soon.

BIS Shrapnel analyst Angie Zigomanis said that affordability issues have already slowed price growth in some of Sydney’s most popular suburbs, discouraging buyers from purchasing homes.

“The places where most people want to live also have the biggest problems with affordability,” Mr Zigomanis said.

“At the same time, the most affordable places are not desirable for many people and that’s a big problem for Sydney.”

SQM Research’s Louis Christopher added that demand for inner city properties cannot continue at the current, frantic level because skyrocketing prices have pushed ordinary people out of the market.

“A good salary — that used to be $100,000 a year. Even a couple who both earn that will struggle to afford an inner city home,” Mr Christopher said.

Herron Todd White’s property clock follows the April release of a similar clock by PRDnationwide that showed the Sydney market was at 11:55 — “minutes” away from peaking.

PRD research director Dr Diaswati Mardiasmo said Sydney was at nine o’clock in early 2014, but massive growth over late 2014 and early 2015 pushed the market closer to 12.

Property clocks are used as a way to illustrate how real estate prices go through a cycle of increasing (seven o’clock to 11), peaking (12 o’clock), falling (one o’clock to five o’clock), bottoming out (six o’clock) and then rising again.